Written by

Matt Helms and Joe Guillen

Detroit Free Press Staff Writers

Detroit emergency manager Kevyn Orr’s office said today that meetings scheduled for Thursday with city unions and retiree groups will deal with funding of the city’s pensions but will focus more on Orr’s plan to shift retirees from city-provided health care to Medicare or health exchanges under the Affordable Care Act.

Orr spokesman Bill Nowling said there still is too much behind-the-scenes discussion to be held before beginning talks about specific remedies with unions and other stakeholders on differences between city consultants’ estimations of pension underfunding and what the city’s pension boards and unions say about funding levels.

So the closed-door meetings, scheduled for this morning and afternoon at a City Hall auditorium, largely will focus on details of Orr’s proposal to dramatically transform health care for city retirees and a limited number of current workers. Orr’s proposal to creditors in a historic meeting last week pegged the city’s unfunded employee health care obligations at $5.8 billion, money Orr says the city cannot afford to pay.

Pension issues and details about what Orr proposes to solve underfunding problems will be discussed more broadly at a meeting next week, Nowling said.

The rate of underfunding of Detroit’s general employee and public safety retiree pension plans is expected to be equally as nettlesome as Orr’s health care proposal, given his suggestion that retirees likely will face cuts in pension benefits because the city can’t afford to pay all of its pension obligations for retirees, who outnumber current city workers nearly 2-1.

“We’ve got to sit down with the pension boards” before wider discussions can take place, Nowling told the Free Press. “We can’t talk about the numbers when we can’t agree on what the numbers are yet.”

Orr’s proposal to creditors said that a preliminary analysis of the city’s two pension funds, the General Retirement System and the Police and Fire Retirement System, showed they are underfunded by $3.5 billion.

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A final analysis of the retirement systems’ funding level is due in the coming weeks. If the analysis, performed by the Milliman actuarial firm, shows the systems are less than 80% funded, Orr, as emergency manager, can remove one or more pension fund trustees. Another option is for state Treasurer Andy Dillon to appoint Orr as sole trustee of the funds if they fall below the 80% threshold.

As the sole trustee, Orr would have the ability, with the treasurer’s approval, to transfer the Detroit pension funds to another system, such as the Municipal Employees’ Retirement System of Michigan, which manages pension assets for more than 700 municipalities.

A trustee for the General Retirement System blasted Orr’s preliminary assessment and predicted the goal is to transfer the Detroit pension assets to MERS.

“They’re grabbing at everything they can in order to justify their takeover,” Trustee Rev. Wendell Anthony said at the board meeting today. “It makes it easier for them to do their dirt.”

Anthony, who also leads the Detroit Branch NAACP, said claims that the pension system is underfunded do not take into account effects of the economic downturn in recent years.

Meanwhile today, a group of city unions slammed Orr’s proposals as “pitting neighbor against neighbor in true Darwinian fashion.”

“The problem with Orr’s approach to fixing the city’s finances is that it pits grandpa’s paycheck against Joe’s streetlight, and they both live next door to each other in the dark,” said Al Garrett, president of the American Federation of State, County and Municipal Employees Council 25.

Orr will not attend Thursday’s meetings but will be represented by city consultants working with him on restructuring Detroit and its finances “who understand the health care plan in very granular detail,” Nowling said.

Orr is expected to attend the meeting next week; details on its time and location weren’t immediately available.

“We don’t have to make a decision this week on any of the stuff we’ve proposed,” Nowling said. “We recognize that this is very technical stuff, and it’s going to take a while for everyone to pore through this.”

Nowling said the two pension funds have signed standard nondisclosure agreements to access actuarial information involved in Orr’s analysis of the retirement systems’ health — including information about individual members’ pensions.

Bankruptcy experts and financial analysts say disagreements between Orr and unions on pensions and health care could ultimately force a Chapter 9 municipal bankruptcy petition by Detroit. It would be the largest U.S. city by population and debt load to initiate bankruptcy proceedings.

Orr’s proposal to creditors outlined debts and liabilities that could be as high as $20 billion for a city with a shrinking population base, dwindling tax revenues and little way of raising revenue to pay its obligations.